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Condominium Project Needs Easement Variance

OCEAN CITY – An unfinished townhouse project in mid-town Ocean City is looking to build again but first is requesting a variance from the Board of Zoning Appeals to construct public easements inside the project.

The Planning and Zoning Commission received a proposal for a subdivision to take place within the condominium and townhouse development known as Broad Marsh, located between 69th and 70th streets on the bayside of Coastal Highway in Ocean City.

Zoning Administrator Blaine Smith explained the Broad Marsh subdivision plat was originally approved by the commission in 2007 for multiple buildings.

Three buildings were built on the easterly portion of the property. There are two buildings with three units each and a third building with four townhouse units and a stacked townhouse unit.

The balance of the project is also a townhouse design, including several two-story townhouses. The total unit count is 71 units in the project. Currently, 12 have been built.

The infrastructure, such as the water and sewer lines, has already been installed for the entire project.

“That in itself is a critical part of what they are requesting,” Smith said. “This was essentially set up as a condominium/townhouse project and those phases that are complete are condominium regime.”

Smith furthered a condominium regime under State of Maryland real property laws gives 10 years to bring other phases into the project unless it receives an extension.

“They have time to expand the condo if they go in that direction, but I believe the current developer of the property has a different interest in creating fee simple townhouses then the condo regime for lending, marketing, and insurance purposes. Fee simple does work better in that respect,” Smith said.

The proposed subdivision of Broad Marsh returned to the commission because if the developer was to build only fee simple townhouses it would require a variance from the Board of Zoning Appeals (BZA).

“The zoning code says all lots are supposed to have frontage on a street, and many of these are interior units,” Smith explained. “There are end units that will be on 69th Street or 70th Street that would qualify for street frontage but they have multiple ingress/egress easements that run from 69th Street to 70th Street.”

Smith added the developer is offering the ingress/egress easement as cut-through streets, and although they will be considered private the streets will be open to the public, which would benefit emergency vehicles.

Another plus side is because the cut-through streets are private property the city has no responsibility over maintenance and liability.

Smith said this type of situation has occurred before in Ocean City and been approved, for example four lots on 144th Street with two easements connected to the back two units.

Legal counsel representing the developer, attorney Joe Moore, explained the developer has no interest in continuing the project with condominium regimes due to the burdensome requirements of Fannie Mae.

Fannie Mae, or the Federal National Mortgage Association (FNMA), is a government-sponsored enterprise and its purpose is to expand the secondary mortgage market by securitizing mortgages in the form of mortgage-backed securities allowing lenders to reinvest their assets into more lending and in effect increasing the number of lenders in the mortgage market by reducing the reliance on thrifts.

“We cannot get financing because Fannie Mae requirements are so onerous that people will not finance this condominium in the configuration that it is in,” Moore said. “Everything that we would have in a condominium we will have here, such as obligations for maintenance of these access roads.”

Moore added that the developer is amenable to public easements on the cross streets.

“The only thing that we are doing is trying to get a project that we can get financed,” Moore said. “So what we would do is the traditional townhouse projects with a fee simple title from the ground to the roof rather the common elements in the interest of a normal condominium … we would create a method by which we would have our so-called public areas with maintenance and fees, we would have a townhouse project, but be able to put forth the proposition to be giving fee simple titles to the land and the structure above it.”

Broad Marsh’s request for a variance is scheduled to go before the BZA on Dec. 13.

“We will come back to you all for subdivision approval once we get the right of the BZA to have structures that event though they are public access ways they are not on public streets,” Moore said.

The commission gave its concurrence for a variance request to the BZA for the subdivision request to return to them afterwards to move the project forward.